Why Software AG Elevated Customer Centricity to the C-Suite

Some companies, like Software AG, find that selling product isn't their focus--making their customers successful is. To focus on that, it's important to start at the C-level.

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According to a C-level executive at Software AG, the German enterprise software giant, selling software is not the reason for the company’s existence. If that sounds a little counter-intuitive to you, you’re probably not alone.

But when you think about it, selling software is probably not the ultimate reason that any software company exists. The purpose of their existence is to become successful, and to thereby make money. The real question then becomes, “What is the best way to go about accomplishing that?” Enter the role of the chief customer officer.

That’s the position held by Software AG’s Eric Duffaut, the aforementioned C-level executive whom I met at the company’s Innovation World conference in Las Vegas last week. Several of Software AG’s top executives had gathered for a Q&A session with the press, and I noticed that the name placard in front of Duffaut identified him only as the “CCO.” I had no idea what in the world that was, and I was racking my brain to figure it out. Chief commercial officer? Chief compliance officer? Chief collaboration officer? I finally gave up and Googled it. Of course. Chief customer officer.

The chief customer officer role isn’t all that new or unique, but I have to confess it was new to me. I was surprised to learn that there’s even a Chief Customer Officer Council, and that according to a 2014 study by that body, 22 percent of Fortune 100 companies have someone in that role. It turns out, however, that far fewer companies outside of that rarified air have a chief customer officer—10 percent of Fortune 500 companies, and only 6.7 percent of Fortune 1000 companies, the study found.

Getting back to the question of the best way for a company to become successful, Duffaut addressed the matter in response to my question about his mandate as chief customer officer. He referred to a conversation he’d had about 15 months earlier with Karl-Heinz Streibich, Software AG’s CEO, which led to the creation of the CCO role.

“No. 1, it starts with a belief that customer centricity is key for any business to be successful,” Duffaut said. “What makes business successful—Software AG or any other company in the world—is the success of your customers. It’s as simple as that, because success scales.”

If a software company says its purpose is to sell software, Duffaut said, it’s missing the point, which is that “we are not here to sell software.”

“We are here to drive value realization for our customers,” he said, “because we care about our success, and this is what will make us successful. All customer-facing organizations have to work as one team, towards one common goal—customer success. This is exactly my mandate and my responsibility at Software AG—being responsible for all customer-facing organizations—sales, marketing, services, and support.”

I asked Streibich, the CEO, for his perspective on what drove Software AG to create the CCO position and to bring Duffaut on board.

“I think we are going through phases, as any company goes through phases,” Streibich said. “Phase 1 was the time before we had the CCO role. We have had different functions and areas of the company. We had a sales organization, we had a marketing organization, we had a service organization, and they all reported to the CEO. What do you normally call that? A silo.”

Streibich said it became clear that in order to engage the customer in a holistic way, it was no longer sufficient to have sales, marketing, and services doing their own things. That’s what led to Phase 2 and the creation of the CCO position.

“It was clear that we needed an integrated go-to-market model,” he said. “The leader of that, who we call the chief customer officer, could also have been called the chief customer success officer. So in this phase, we need this integrated model of developing and approaching the go-to-market [strategy]. Now we’ve had that for about a year. It is a philosophy of customer centricity, customer-centered innovation.”

Phase 2, then, is all about taking that holistic step forward toward customer centricity. Now, Streibich said, it’s time for Software AG to move on to Phase 3, in which that responsibility isn’t delegated to anyone. It becomes the responsibility of the entire company.

“It will be much more than [a question of] how do we make them even more successful,” he said. “It’s how do we now enable the entire organization to take more responsibility for the success of the customers, rather than being spectators. It’s up to the CEO to ensure that the entire organization understands that message.”

I had the opportunity to discuss all of this with Giles Nelson, Software AG’s senior vice president for product strategy, who echoed the sentiment of customer advocacy.

“I think Eric’s view of things is he wants Software AG to be a much more customer-centric organization than perhaps it has been,” Nelson said, “and to make a very strong statement to customers and partners that it’s them that we are here to serve. Yes, of course there are shareholders and employees and other stakeholders. But it is critical for us to please our customers, and to ensure that they keep coming back for more.”

I asked Nelson if the nature of Duffaut’s role might naturally result in a clash with others in the C-suite. In response, Nelson brought the conversation a bit back down to earth with refreshing candor.

“There will be, I would imagine, different agendas,” he said. “Perhaps the CFO will be looking at costs and margins, and that’s another business priority for Software AG. But when it comes to investing in things which would benefit customers, then there’s going to be a tension there. That exists in all businesses, so there’s no surprise there.”

Reinforcing Streibich’s point that customer centricity can’t be delegated, and that there can be no spectators in that regard, Nelson noted that even the product development organization needs to be customer-facing.

“It’s not just about our engineers in dark offices working on some magic,” he said. “It’s about understanding customers and what they’re doing with it, and using that to inform what we should be building.”

But in that context, Nelson cited Clayton M. Christensen’s book, “The Innovator’s Dilemma,” which famously refers to companies being “held captive by their customers”—the idea being that companies can focus too heavily on their customers’ current needs, resulting in a failure to innovate to meet needs that those customers may not realize they’ll have in the future.

“Sometimes you do have to balance what customers want, because they’re going to be thinking about things from their own perspective, and only their perspective, and what perhaps they need for the next one or two years,” Nelson said. “But we also have to look at this issue about where the software industry’s going—what’s becoming commoditized, where we can add greater value. And that may not necessarily be in tune with what a set of customers want in the next release.”

Nelson said Software AG needs to maintain a much broader perspective.

“We have to think a bit bigger,” he said. “Our privileged position is that we can see what a lot of customers from a lot of different industries are doing, which they can’t see.”

A contributing writer on IT management and career topics with IT Business Edge since 2009, Don Tennant began his technology journalism career in 1990 in Hong Kong, where he served as editor of the Hong Kong edition of Computerworld. After returning to the U.S. in 2000, he became Editor in Chief of the U.S. edition of Computerworld, and later assumed the editorial directorship of Computerworld and InfoWorld. Don was presented with the 2007 Timothy White Award for Editorial Integrity by American Business Media, and he is a recipient of the Jesse H. Neal National Business Journalism Award for editorial excellence in news coverage. Follow him on Twitter @dontennant.

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